Employee Fraud Prevention Tips

Taming Employee Theft

The most usual form of worker stealing is embezzlement. Failure to institute the necessary controls to avert this theft puts you at risk of fraud.

Protecting your Business from Unscrupulous Staff

You could curtail employee embezzlement by following a number of fraud prevention principles, namely:

Personally receiving your bank statements

Separating all tasks

Conducting yearly general or fraud audits

Carefully monitoring your receivables

Keeping your records safe

Understanding your business’ books

Closely monitoring your payroll

Being careful with checks

Sending your accountant or bookkeeper on yearly vacation

Individually getting your Bank statements

Do not allow a dishonest person the chance to eliminate evidence of wrongdoing. Every month, you or your accountant need to receive cancelled checks or unopened bank statements. This tactic will facilitate fraud detection.

Checks

Fraud Loopholes

Your examination needs to scrutinise the checks for fraud indicators such as:

Unknown payees

Seemingly forged signatures

Check amounts larger than your business’ petty cash allowance

Missing checks

Irregular check numbers

Checks written for third parties but endorsed by your staff

Check payee differing from the one in your records

Safely Keeping your Records

Ensure the safety of your accounting records by:

Locking up paper ledgers

Not allowing unofficial access to your bookkeeping software

Protecting the computer bearing your books as well as the bookkeeping software using a password

Frequently hanging the password

Not including the computer bearing your books on your business’ network

Cautiously Checking your Receivables

Some receivable fraud detection caveats you could take include:

Obtaining back and front copies of customers’ checks

Ensuring customers’ checks are deposited in your business’ account

Assigning at least two workers to count and confirm incoming receipts

Ensuring that all incoming checks are properly endorsed

Personally investigating client protests about yet to be received payments

Procuring a ‘For Deposit Only’ stamp for use on all incoming checks

A ‘For Deposit Only’ mark on a check would prevent a dishonest employee from cashing it

Understanding your Business’ Books

Fraud is easier to occur where bookkeeping is unsupervised and sloppy. Here, your employee can easily keep receipts and cash. To avoid embezzlement, you need to know your business’ bookkeeping and recordkeeping system. This knowledge will allow you to easily review your books for inconsistencies. You thus minimise your risk of fraud.

Upping Your Accounting Knowledge

You could find it challenging to comprehend the numbers. Some avenues for improving your knowledge include:

Asking your accountant to give hints on crucial items to examine

Enrolling for an accounting and bookkeeping course

Splitting all Responsibilities

As a general rule, you need not allow one worker to manage all the facets of a financial transaction. Separate the transaction into bits such as:

Check writing

Check signing

Check mailing

Have separate individuals undertake the different bits. By employing this fraud prevention technique, you make it hard for some dishonest employee to:

Embezzle you

Doctor your records as a cover-up strategy

Thoroughly Observing your Payroll

There are two options of ensuring strict payroll control, namely:

Having a separate payroll account

Thoroughly scrutinising payroll checks

Distinct Payroll Account

Deposit the precise cash you will expend via payroll into the account. Carry out a reconciliation exercise each month.

Conducting Annual General or Fraud Audits

Without warning, invite a third-party professional to audit your business accounts. A general audit uncovers an embezzler’s actions. A fraud audit helps to uncover scams and prevent their future recurrence.

Requiring all checks over some minima amount to be double signed; one signature being yours

Sending your Accountant or Bookkeeper on Yearly Vacation

Embezzling employees sometimes decline to go on leave so as to keep concealing their actions. To prevent this possibility, ask your accountant or bookkeeper to go on annual leave. Ideal leave duration lasts 2 weeks and takes place during book closing times. While the employee is away, delegate the duty of verifying the books to someone else.

Employee theft is the most common form of embezzlement emanating from workers. You need to take certain fraud prevention measures so as to ensure that your business does not become a victim of worker dishonesty. Some recommended approaches include; Personally receiving your bank statements, separating all tasks, conducting yearly general or fraud audits, carefully monitoring your receivables, keeping your records safe, understanding your business’ books, closely monitoring your payroll, being careful with checks, and sending your accountant or bookkeeper on yearly vacation. These fraud detection and prevention measures can go a long way in protecting your business.